A Rural Blog that provides views & insights from a Conservative Georgia Democrat

Thursday, March 26, 2009

Crawford: We gave tax cuts; where are the jobs?

Georgia's lawmakers have always been willing to approve tax breaks for the state's business leaders and special interests, but they have really stepped on the gas since Republicans took control of the House and Senate four years ago.

In that first year of Republican control, legislators passed a huge break for corporations, a bill that would give them tax reductions totaling nearly $1 billion over a 10-year period.

Since 2005, the General Assembly has routinely approved tax breaks for Delta Air Lines worth $15 million a year or more along with tax gifts to such beneficiaries as the Georgia Aquarium, Gulfstream, Aflac, and insurance companies that market high-deductible health plans.

It is estimated that the tax breaks handed out by lawmakers over the years are worth more than $1 billion annually.

And that doesn't count the huge giveaways from this year's session. The two chambers have already passed, and Gov. Sonny Perdue has indicated he will sign, a bill that allows Georgia Power to charge ratepayers early for nuclear power plants that won't be operational until nearly a decade from now, a $1.6 billion financial gift for the giant utility.

Both chambers are also considering another package of tax breaks for businesses that could include elimination of the corporate income tax. Allowing businesses to avoid paying state income taxes will save them an estimated $700 million a year. That would be one of the biggest financial jackpots ever won by the corporate lobbyists who crowd the capitol's marble-floored halls.

Every time these tax gifts are debated, the bills' supporters make the same argument for their passage: Business tax cuts will create jobs.

When the billion-dollar tax break for corporations was being debated in the Senate in 2005, Casey Cagle, then a senator from Gainesville, averred, "It's pro-jobs legislation. It will ensure we have jobs for the future."

"It's about jobs, jobs and jobs," said Rep. Ron Stephens, R-Savannah.

Funny thing. All the new jobs that were supposedly going to be created from this gusher of business tax breaks don't seem to have materialized.

We have continued to suffer higher than average unemployment since 2005, culminating last month when the jobless rate hit the highest level ever in Georgia at 9.3 percent. How could that be happening if all of those business tax cuts were creating so many jobs?

If you look at data available from the state Labor Department, you'll see that in the 50 months since January 2005, which was when Republicans assumed control of the legislature, Georgia's unemployment rate has been higher than the national rate for 28 of those months

Obviously, most of the current job losses can be attributed to the worst economic recession since the 1930s. Every state is losing jobs and Georgia is no exception. But our unemployment rate has been higher than the national rate, sometimes by a substantial margin, for the last 16 consecutive months. That dates back to before the current downturn began. If all those business tax cuts are going to create new jobs, shouldn't Georgia at least be undercutting the national average?

We heard similar arguments at the federal level several years ago when George W. Bush was persuading Congress to approve massive tax cuts. The Bush administration contended that these tax cuts would also create scads of new jobs. Except that they didn't

"When it comes to reviving the economy, tax cuts do not work as well as smart public spending," wrote Lawrence Mishel, president of the Economic Policy Institute in Washington. "Even worse were the Bush tax cuts of 2003, which the administration claimed would generate 1.4 million jobs on top of the 4.1 million jobs that were expected to be generated over the 18 months following June 2003. ...Not only did the promised 1.4 million additional jobs not appear, but the 4.1 million jobs expected with no action also failed to materialize."

Don't get me wrong. For the entities who get them, tax cuts are a wonderful thing. I'd love to get a business tax break myself, but I can't afford to hire lobbyists to demand one from the legislature.

Let's be honest, however, about what these tax cuts are: a financial gift to whoever happens to receive them. Business tax breaks are not going to create jobs and it's time that legislators quit using that as an excuse for passing them.

Tom Crawford is the editor of Capitol Impact's Georgia Report, an Internet news service that covers government and politics in Georgia.

When you have Tom Crawford, one of the most respected political observers of Georgia Politics criticizing a piece of legislation, you know it is a big deal. I don't like this bill either, but the part that got me was the number of Dems who voted for the bill. It's a damn shame.